• Collette Smith, Chief Transformation Officer at SmartSearch


• 27.03.2025 01:15 pm
#Compliance #RegulatedBusinesses

No wonder financial regulations are tightening. While no-one knows for sure, the National Crime Agency reckons that £100bn of illicit finance is laundered through the UK every year. £12bn of that originates from these shores, it says. The rest is imported. The real-world impact is dreadful, and everywhere: people are trafficked, drugs sold, terrorists financed. The knock-on impact is less discussed, but equally pernicious: as black-market capital is sucked out of the economy, the UK taxation purse is denied and vital public services – some already at breaking point – are choked of revenue. Those most in need bear the biggest brunt.

Clamping down is the right thing to do. Many businesses agree: last year, independent research from SmartSearch revealed that almost a third (31%) think financial crime is a key factor hindering the UK’s economic growth.

Yet tightening the reigns comes at a cost. 76% of those businesses also said that regulatory changes are hindering their growth, such are the time and resource investments required by compliance. This too, is not good.

And it’s getting worse.

Businesses across regulated industries face an ever-changing compliance landscape and severe consequences if they don’t do enough. This isn’t just big City firms, either. SMEs – which represent most of the UK’s businesses - are also being hit hard. Last year, HMRC fined 254 estate agencies more than £1.6 million for failing to register or re-register for anti-money laundering (AML) supervision. Penalties ranged from £1,500 to £50,000. 

Amid this growing pressure, an overwhelming majority (89%) of businesses are already finding current regulations challenging. Nearly three-quarters (73%) say they lack confidence in their ability to stay compliant, with almost a third (30%) expecting things to worsen in the next year.

Taming the beast with technology

The UK’s over-reliance on cumbersome manual processes is a massive problem. Far too many due diligence checks are still performed manually in service of AML, Know Your Customer (KYC) and Know Your Business (KYB) mandates. As the race between crime and regulation digitises – businesses have little choice but to follow suit, by embracing the technologies and services that can both increase accuracy of document verification, and support faster, more efficient compliance processing.

Only then can they hope to thwart a tech-savvy criminal’s attempt to slip through the net via, say, a convincingly faked identity document, or the concealment of a sanctioned or politically-exposed-person (PEP).

Operationally, a different approach is also needed. By adopting a digital-first strategy, businesses can streamline their processes enabling them to reduce the time, resource and cost of compliance, allowing them to win customers through trusted identities.

To date, most businesses must commit resources to understanding their regulatory exposure, work out the operational implications and then implement changes needed to remain compliant. All without external support.

In today’s fiery regulatory environment this barely seems fair, let alone feasible. Happily, a new breed of specialist tech and compliance service outsourcers are emerging to relieve the pressure on regulated companies struggling to keep up. So powerful is this model, that many companies are finding it transforms a crippling compliance burden into a strategic advantage. Engaging a specialist partner can help a business rapidly evolve by:

1. Adopting digital solutions: Leveraging tools like automation to streamline compliance processes, reduce manual workloads, and keep the business competitive in an evolving landscape.
2. Identifying specific needs: There is no one-size-fits-all solution. Tailoring solutions to industry-specific risks is a must, and enables companies to address their unique regulatory challenges more effectively.
3. Collaborating for resilience: Working more closely with regulators, advisors, and technology providers to ensure the business stays ahead of regulatory changes, while also sharing best practices and reducing uncertainty.

Companies in regulated sectors should view compliance not as a box to tick, but as an ongoing journey. Both criminal and legitimate industries are digitising, fast.

What’s more, the world is getting smaller: people, money, goods and services are flowing across borders and jurisdictions faster and in greater quantities than ever before.

Only by changing how they engage with compliance and due-diligence processes can organisations strike the balance between managing their regulatory exposure and supporting their business growth, all while protecting themselves and their customers from financial crime.